Posts Tagged ‘growth strategy’

Is Innovation Part of Your Growth Strategy?

Tuesday, July 16th, 2013

My friend Lisa Taylor is the founder of Challenge Factory, which offers unique career services for individuals and talent programs for companies.Innovation as a growth strategy for Canadian business owners

She, quite accurately in my opinion, describes her company as Canada’s innovation leader in career and talent management.

So it seemed only appropriate that Lisa would see, and forward, an article about a survey on firm-level innovation in Canada¹.

The results contain some interesting lessons about innovation as a growth strategy for Canadian business owners.

1.  The most successful innovation strategy is to provide products and services to new international markets. According to the survey, firms that do this earn between 10 and 30 per cent more net income than their counterparts using other approaches.

Yet more than 85% of Canadian firms prefer to operate within provincial or national borders, or in North America, rather than competing in international markets.

Perhaps this is a result of our conservative nature.

2.  More than half of the Canadian firms surveyed pursue a “user needs-driven” innovation strategy. This means they get new ideas for developing products and services from customers.

In comparison, about one-third of the respondents adopted a technology-driven innovation strategy – one that relies on exploiting advances in technology to gain a competitive edge.

The user-needs approach is probably less risky and may produce faster returns than the technology-driven.

3.  The most common challenges which slow down or prevent innovation include – fear of risk, lack of funding, lack of leadership focus and the organization’s culture.

The fear of risk and lack of focus make perfect sense as challenges to innovation and reflect what we see in our own practice. You can argue that, since a company’s leadership directly influences the culture, those 2 are related also.

4.  Internal cash is the number one source of funding for innovation in Canadian firms. Government financing comes second, ahead of private equity and bank financing.

And firms looking to expand the size of their markets/territory make more use of internal financing and less use of government funding or private equity than do firms with user- or technology-driven innovation strategies.

It’s not clear if the use of internal cash is by choice or by constraint. Either way, it’s interesting that neither private equity nor government financing is more readily available for market expansion, given the fact that the companies doing this achieve better average financial performance than other firms do.

5.  There is a strong correlation between the intensity of innovation efforts and company performance – but only if the innovation activities are well managed.

This should not be a surprise to anyone who follows my blog because it’s confirmation of a point I make often. If company A executes its strategy more effectively than company B, then company A will obtain the best results, even if company B has the better strategy.

You can read the article Lisa sent me here.

______________________________________

¹  2012 Survey Findings: The State of Firm-Level Innovation in Canada, published by The Conference Board of Canada’s Centre for Business Innovation.

 

If you enjoyed this post you’ll also enjoy 3 Things That Shape A Good Strategy

Click here and automatically receive our latest blog posts.

 

Share

Buying A Company As Part Of A Growth Strategy

Tuesday, June 4th, 2013

Acquisitions fail far more often than they succeed. You can easily find statistics to prove that.Acquisitions fail far more often than they succeed.

If you’re not a numbers person, then you only have to think of AOL and Time Warner; and News Corp and MySpace.

Those are all big corporations, I know, but it’s nice to see the big guys get a bloody nose every now and then.

Buying another company, as part of a growth strategy, isn’t something that we see often.

It’s probably done most frequently when a client buys a smaller competitor in a Province, State or country they’re not already in. They’re quickly expanding their existing business by adding experienced sales, service and support staff where they had none.

What’s even less common is seeing a client buy a company whose products and services are “complimentary” to theirs.

There’s a lot for privately-owned businesses to worry about with acquisitions.

For a start, there’s getting a fair valuation for the target company and being thorough in due diligence to make sure nothing is missed. If a ‘biggie’ like Hewlett-Packard can make a mistake (with Autonomy), then anyone can.

Then, when the deal is done, there’s the whole challenge of integrating the people, who may be used to doing things in a completely different way. Not to mention different (and often incompatible) accounting and CRM systems.

When business owners buy a company for the first time, they often underestimate the lack of direct control they have over their new acquisition. And it seems to increase with the distance between the parent company and the new one. (Compare driving across a city to flying across the country to “sort something out”.)

So, why bother?

Because, like many things in life, it’s not what you do, it’s how you do it. Go back to the ‘biggies’ again for a moment and think about Google and YouTube or Best Buy and Geek Squad. Done well, acquisitions provide a great return on investment.

There’s research that says if a company is bought to expand the existing business, then it should be absorbed into the buyer as quickly as possible. Signage, letterhead and all other image stuff must be changed to that of the parent company. Duplicated or conflicting processes and systems must also be replaced. But if the acquisition is made to complement the buyer’s business, then the new subsidiary is best run separately and left with it’s own identity.

Which makes sense if you think about it this way. ABC company buys XYZ company.

If the XYZ is same business as ABC, the owner and management team at ABC already have been successful in that business and, hopefully, know why. XYZ should be folded into ABC.

If the XYZ is in a separate, but complimentary, business or industry, XYZ’s owner and management team have presumably been successful. Otherwise, ABC would have bought another company. So ABC should leave them alone.

All of which will make watching Yahoo’s acquisition of Tumblr interesting…..

 

If you enjoyed this post you’ll also enjoy Are Your Core Competencies Coming – Or Going?

Click here and automatically receive our latest blog posts.

The Next Research In Motion/RIM?

Tuesday, September 21st, 2010

Last year we helped a company called School’s Cool www.schoolscool.com with their growth strategy, including pitching to investors. In the interests of full disclosure we were paid for our work, but ProfitPATH doesn’t normally work with early stage companies.

We made an exception in this case for 2 reasons. The results delivered by their product are outstanding and they have been independently verified over a number of years. Secondly, the team – led by the exceptional woman founder – is driven by their desire to help people who do not have the advantages most of us do.

The School’s Cool program runs over 6 weeks and accelerates the developmental skills of children by up to 1 year in that period! It levels the playing field for children who would otherwise enter kindergarten unready, and thus have less chance of starting their education successfully.

We believe that School’s Cool, which is based in Haliburton, Ontario, could be the next Canadian success story. So did Flaghouse, a major distributor in the educational space, and their visionary, Canadian-based, lady executive, who signed School’s Cool to an exclusive deal.

And did we mention that over 50% of profits go directly back into charitable activities?  (All of this means they’re covered by the guidelines for ProfitPATH’s social awareness policy, which is why we’re blogging about them.)

Now School’s Cool has been entered in a world-wide contest for social enterprises that a) have an idea that could change the world and b) are prepared to “give back.” The contest is called “The Best Brilliant Ideas for Humanity.”

Here’s where you can help.

Go to http://www.bestideaforhumanity.com/profile.cfm?eid=148 and register so the organizers can validate your email address.  They will send you an email with a link to go and vote for School’s Cool.  Then tell your friends about this great Canadian company and post a message on your blog or Facebook page.

Post History